The Division Bench of the Delhi High Court in the case of M/S Special Cables Pvt. Ltd. vs Central Board of Indirect Taxes and Customs & Ors. consisting of Justice Vibhu Bakhru and Justice Amit Mahajan expounded that merely because the Petitioner was denied the benefit of budgetary support under the Scheme of Budgetary Support under the GST Regime at the material time, the same cannot be read to mean that the Petitioner was not availing the same.
Brief Facts:
The Petitioner, engaged in manufacturing business, filed this petition being aggrieved by the denial of budgetary support under the “Scheme of Budgetary Support under Goods and Services Tax (GST) Regime to units located in State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North-Eastern States including Sikkim” (hereinafter referred to as “the Scheme”) notified by the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion.
Procedural History:
The Petitioner had set up its unit in Rudrapur and in compliance with the Notification, issued a letter informing the Jurisdictional Commissioner that it was entitled to avail the exemption of excise duty in respect of newly established manufacturing units. Thereafter, it commenced commercial production and informed the concerned Assistant Commissioner of such commencement.
As per Respondent No.3, no intimations were received and therefore, the Petitioner was denied the exemption.
Thereafter, the Assistant Commissioner issued a Show Cause Notice calling upon the Petitioner to show cause as to why it should not be denied the benefit of exemption and the excise duty on goods manufactured and cleared by the Petitioner from January 2010 to September 2010 not be recovered u/s 11A of the Central Excise Act, 1944 along with penalty and interest. The Petitioner contended that it was entitled to exemption, however, the said contention was not accepted by the Assistant Commissioner and an order of adjudication denying the Area-Based Exemption on the ground of non-receipt of the intimation was passed. The Petitioner paid the excise duty under protest and informed the Jurisdictional Assistant Commissioner.
Thereafter, the Petitioner filed an appeal before the learned Commissioner (Appeals). The learned Commissioner found that the Petitioner was entitled to exemption. Accordingly, the Petitioner’s appeal was allowed.
The Revenue assailed the order before the Central Excise and Service Tax Appellate Tribunal (‘CESTAT’). Although the order was not stayed, the Department issued several show cause notices to the Petitioner demanding excise duty for goods cleared after September 2010. Given the above, the Petitioner continued to pay excise duty under protest. The Revenue’s appeal was rejected by the learned CESTAT.
The Petitioner sought a refund of the excise duty paid by him under protest and challenged the order that directed the refund to be deposited in the Consumer Welfare Fund in terms of Section 11B (2) of the Central Excise Act, 1944.
Contentions of the Petitioner:
It was contended that it is entitled to budgetary support under the Scheme as it was entitled to Area Based Exemption from Central Excise as per the Notification dated 10.06.2003 as amended from time to time (‘the Notification’).
Contentions of the Respondent:
It was contended that the Petitioner did not fulfil the criteria of an ‘Eligible unit’ under the Scheme as it was not availing the Area Based Exemption under the Notification.
Observations of the Court:
It also noted that the Scheme defined the term ‘eligible unit’ as a unit eligible before 1st July 2017 to avail the benefit of ab-initio exemption or exemption by way of refund from payment of central excise duty under notifications, as issued in this regard, listed in the Scheme and was availing the said exemption immediately before 1st July 2017.
The primary issue to be ascertained was whether the Petitioner’s unit was entitled to the benefit of the Notification and was availing of the exemption immediately before the 1st of July 2017.
The Bench opined that the Petitioner was entitled to the benefit of the Notification ab-initio given the orders passed by the Commissioner (Appeals) and the learned CESTAT. It also expounded that the fact that the Petitioner was denied the benefit at the material time, could not be read to mean that the petitioner was not availing of the same. The fact that the Respondents had carried the matter to learned CESTAT and in the meantime, had insisted on collecting the central excise duty, which was paid by the Petitioner under protest, could not be construed to hold that the Petitioner had not availed of the benefits immediately before 01.07.2017.
It further ruled that the second condition that the unit must be availing the benefit immediately before 01.07.2017 is to distinguish between those units that have decided not to avail of the benefit. Further, this condition is not to be read to exclude entities that asserted their claim for such exemption but the same flowed to them subsequently given the Revenue contesting the same.
The Decision of the Court:
Based on the above-mentioned findings, the Delhi High Court allowed the appeal and directed the Respondents to release the budgetary support amount as assessed to the Petitioner in terms of the Scheme as expeditiously as possible.
Case Title: M/S Special Cables Pvt. Ltd. vs Central Board of Indirect Taxes and Customs & Ors.
Coram: Hon’ble Justice Vibhu Bakhru, Hon’ble Justice Amit Mahajan
Case No: W.P.(C) 7745/2019
Advocates for Petitioner: Advs. Dr. G. K. Sarkar with Ms. Malabika Sarkar & Mr. Prashant Srivastava.
Advocates for Respondents: Advs. Mr. Sushil Kumar Pandey, & Mr. Kuldeep Singh, Mr. Harpreet Singh, SSC with Ms. Suhani Mathur
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